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Music

02/05/2018

A dispute over the value of royalties, residuals and image value between the estate of musical superstar Whitney Houston and the IRS has been settled. The estate of the iconic singer, who drowned in a bathtub at a Beverly Hills hotel suite in 2012, had been ordered to pay $11 million to the IRS based on the IRS’s charge that the estate had grossly underreported her assets.

This settlement comes after the singer’s estate claimed the IRS was incorrect in their value determination, and alleged that her music royalties, digital performance royalties, motion picture and TV residuals, and publicity rights—which they valued at $11.7 million—had been overvalued.

The parties were scheduled for a court trial to argue about the details of their lawsuit in February. However, that’s been cancelled with the news of the out-of-court settlement.

There’s now no need for the hearing.

Meanwhile, the royalties from the I Will Always Love You hitmaker’s extensive collection of hits are set to keep soaring. In November, some previously unreleased tracks from Houston were made public to mark the 25th anniversary of The Bodyguard.

The collection, Whitney Houston - I Wish You Love: More From The Bodyguard, features several unheard pieces from the late singer's legendary career. The release marks the 25th anniversary of The Bodyguard: Original Soundtrack Album, which she co-executive produced with Clive Davis.

The soundtrack from the movie, which was Houston’s first big screen appearance, is the top-selling soundtrack album of all time. It’s sold more than 45 million copies around the world, and was the first record to sell more than a million in a single week.

01/22/2018

It appears that the pop icon’s estate may have dodged an expensive tax bullet.

Bloomberg reports in its article, “Michael Jackson Estate May Avoid Penalties in IRS Dispute,” that a federal tax court judge denied the IRS’s bid to provide additional evidence in a case that was tried in Los Angeles in early 2017. The agency failed to follow certain procedural requirements. As a result, it is barred from seeking as much as 40% of the allegedly understated tax in penalties.

“What happens if a party with the burden of production on an issue fails to introduce sufficient evidence at trial to meet that burden?” Judge Mark Holmes said in his December 2017 order. “Well, he loses.”

The executors of Jackson’s estate, lawyer John Branca and former music industry executive John McClain, have been monetizing the legacy of the singer for the benefit of his children. Jackson died in 2009.

“This Is It,” a documentary about Jackson’s preparations for his ill-fated 2009 tour, went on to be the highest-grossing concert movie of all time. It made $261.2 million in worldwide sales, according to researcher BoxOfficeMojo.com. In 2016, the estate sold Jackson’s half of the Sony/ATV music publishing business to Sony for $750 million.

In 2013, the IRS pursued the estate with a “notice of deficiency,” claiming it had undervalued assets including real estate, a Bentley automobile and Jackson’s “image and likeness.”

The tax court ruling didn’t quantify how much the assets were allegedly undervalued, but Bloomberg Businessweek reported in February 2017 that the IRS claimed Jackson’s name and image should have been valued at $434 million.

The estate said that Jackson’s name and image was worth only $2,105. That estimate implied that his image had been rendered all but worthless by stories about skin bleaching, his obsession with plastic surgery, prescription drug abuse and allegations that he molested young boys who visited Neverland Ranch.

The lawyer representing the estate said that the court’s order was “well-reasoned” and felt that it might prevent the government from coming back at the estate looking for a penalty assessment. That would be good news for the estate and the family.

The IRS spokesperson said the agency does not comment on pending litigation.